Failure in B2B E-Commerce Strategy & its Causes

In this uncertain and rapid changing environment, the persistent system outages experienced by the online brokers are not unique to them. To a certain extent, they are symptomatic of failures that are experienced and will continue to be experienced, by all e-commerce firms, technology-dependent firms, communication providers and the exchanges themselves. There are number of companies which had experienced the e-commerce failure especially in the aspect of day to day business. As instances, the affected companies will be elaborated as below:

1. MCI WorldCom and AT&T.

From August 5 through August 15, 1999, MCI WorldCom, the number two U.S. long-distance carrier, experienced the most unrelenting and disruptive communications failure witnessed to date. The failure occurred in its frame-relay network which transmits data between computers at very high speeds and resulted in the Chicago Board of Trade ("CBOT") shutting down its electronic trading system for more than 60% of its usual operating hours during August 5th to 13th. Additionally, ATM networks experienced periods of unavailability because these machines depend upon frame relay networks to determine customer balances. Internet service providers ("ISPs") were also affected. An estimated 15% of the frame relay network failed, impacting 30% of the network's customers.

The most important lesson from this outage is that "it won't be the last such outage," as observed by telecom consultant Jeffrey Kagan. Despite doing "everything they could," MCI was unable to avoid this, stated Kagan.

Indeed, MCI WorldCom's failures parallel system outages experienced by AT&T's frame relay network in April 1998. Both outages occurred while the firms upgraded their systems. MCI WorldCom resolved the outage problem only by removing a new version of Lucent software from the network.

AT&T also suffered network capacity problems with customer demand for its WorldNet, unlimited access Internet service, earlier this year and again in November. After introducing the unlimited service in December 1988, demand began to outstrip capacity in 60 of 500 service areas with the problems manifesting in "high-peak periods." The situation echoed the difficulties America Online faced in 1997 when it extended monthly unlimited usage.

2. eBay

The most significant web failure experienced by any e-commerce site so far occurred at the online auction house eBay over June 10-11, 1999 when the site closed for 22 hours. Prior to June 10, 1999, eBay experienced other significant failures and has since suffered additional outages which together totaled more than 70 hours of outages in the first seven months of the year. During the two day June crisis, eBay's stock crashed $47 to $135, wiping out $5.7 billion of market capitalization, and dipped below $80 in early August before rising again the $130 range. Experts assessing the cause of the disaster cite eBay's failure to build a redundant, scalable web architecture. Moreover, eBay's outage was prolonged due to the fact that its database files became corrupted, requiring the files to be rebuilt before the system could be brought back online.

The outages at eBay echo the strain that outsized demand has placed on online brokerage firms. As one consultant noted, "A lot of these sites just can't keep up with their growth. time." (And the extent and complexity of these problems prevents easy solutions.) Thus, eBay outages knocked its site out four times in five days this They don't have enough skills to keep the site running all theNovember. The latest was attributed by eBay to a nearly ten-fold increase on a server for graphic images.

Failure factors in today's electronic economy are a lot different than they used to be, and long-standing relationships may fall apart in the face of intense scrutiny and heightened competition. Some common factors involved in failed B2B e-commerce initiatives include:

• Relying on long-term relationships -- Getting comfortable and assuming that a business relationship, because it has existed for years, will continue to exist. Long-term business relationships are a thing of the past in the electronic world, and the ability to see everyone's wares at once makes us fickle.
• Focusing too much on the "e" in "e-commerce" -- Customers still need personal attention; this is why successful e-businesses have multiple channels of communication, not just the Web. The whole concept of e-commerce is so electronic, there is a natural tendency to overlook the actual human customer at the other end of the transaction.
• Vertical integration -- Trying to do everything under one roof. More companies are outsourcing technical support, fulfillment, security management, Web hosting, and almost everything that doesn't have to do with their core businesses. Companies that do this are nimble and efficient, and they run rings around huge, monolithic companies that try to bring everything inside.
• Attempting to hoard information -- You can't keep secrets in an electronic marketplace. Whereas a traditional company may have flourished by keeping information on a "need to know" basis, this no longer works. Information is the fuel of the new economy, and you, as a business participating in B2B e-commerce, have to kick in your share.